Find entry and exit points, set stop loss and stop win prices
On some trading days or months, prices remain unchanged or are in a significant range consolidation state. In these situations, it is meaningless to build positions based on changes in macro trends or fundamental shifts in market sentiment. Day traders are adept at detecting short-term trends in this environment. In consolidation trading with low volatility, technical analysis often undergoes changes.
In trend environments, the 200 day moving average or relative strength index (RSI above 70 or below 30) often plays a greater role, but in non trend environments, using the 55 day moving average or the 5 day, 10 day moving average may be a more successful strategy. The default cycle of RSI is 14 days, but it can also be shortened (or extended according to macro conditions) to enhance sensitivity. When the money market remains unchanged, some traders trade in an additional high interest currency (such as currency A) and short a low interest currency (currency B), which is an example of 'carry trading'. Traders earn profits every day through the interest rate difference between currency A and currency B. Even if there is little change in spot prices, traders can still make profits over time.
At other times, there will be macro trends, such as the central bank introducing a series of interest rate cuts or hikes. If Central Bank A raises interest rates while Central Bank B maintains interest rates unchanged or lowers them, short selling Currency A is meaningful for Currency B. During the US financial crisis and the eurozone crisis, the pursuit of interest rates and returns led global investors to enter emerging market currencies when the market was confident that developed countries would maintain low interest rates for a long time. The fact that this trend will continue for a long time in 2008 is not yet clear, but emerging market currencies have benefited from it for almost five years.